Tuesday, April 01, 2014

How to Save the Middle Class

No matter where you turn, when the conversation turns to the economy, the one hobby Americans never tire of is bemoaning "the vanishing middle class." And while it is true that the United States' middle class is losing ground to that ever-encroaching poverty line, I submit to you that the middle class need not be vanishing at all. In fact, it could be thriving, if only this nation would wake up to reality.

Now before you go sideways on this, hear me out. I'm not here to offer you overused, under-thought platitudes and soundbytes. I've really thunk this out. I mean, it's my job to find solutions where none have been previously found, so in my world, this is nothing special. But it is different. Which is why you should give it a spin.

The most common lament we hear about the loss of jobs is usually accompanied by phrases like, "worker displacement" and "off shore" theft of American jobs. Let me state one thing at the outset of this wonderfest:

This country needs to get real.

The first realization middle class Americans have to make is that the days of "getting a job" are, for the most part, over. The second realization is that going to college or pursuing higher graduate degrees isn't going to solve the problems borne of the first realization.

Getting a job, working for the man, putting in your time are all lost causes, relegated to obsolescence alongside rotary dial telephones, iceboxes and fans of affirmative action programs. Sure, those all were nice while they were needed, but those days are over. It's time to move on. And the reason "getting a job" is no longer relevant comes down to -- what else -- simple brand strategy.

For the most part, I believe that "life is a branding problem," my own personal definition of branding as "being perceived as the only solution to your prospects' problems." The stronger others perceive yours as the only solution, the more likely your brand is viewed as the only game in town. When you're perceived as the only game in town, people stop shopping -- and they pay your asking price -- because they have no place else to go.

The problem with those whose goal is "getting a job" is that they're perceived as generic. They might be white collar, blue collar, light blue collar or completely collarless. The point is that if your customer or employer can't distinguish one laborer or manager from another, all he's left to go on is price, which means he's hiring from mainland China, India or someplace where English is a second language. And why not? Nobody here gives him a tangible reason to pay more, so he goes with the lowest bidder -- and there are entire continents filled with people who work cheap. Bottom line is that unskilled labor is out and that those engaged in skilled labor better get their acts together if they intend on paying the rent.

That being the case, I submit to you there's a way to bulletproof the middle class. And it has nothing to do with labor at all.

What everyone seems to be missing is understanding technology's true infringement on the human economy. The obvious one began back in the Industrial Revolution, where machines began to displace human labor. Sure, the initial capital outlay for machinery was higher, but in the long run, machines were more productive, worked longer hours, never complained about conditions, never got sick, never asked for time off or needed to run home early to coach their kids' soccer game. Some displaced mill workers learned other skills, but the really smart ones learned a bigger, less obvious lesson:

Job security only exists in areas that aren't susceptible to mass production.

Today, the internet displaces retailers. Robots replace line workers. Websites replace printed publications. But if you look closely, each of these industries contains the same fatal flaw: they're dependent on mass markets to survive. The fact is that the larger the customer base, the more profitable it is to displace laborers and middle management with technology or offshore solutions. That's because the public buys staples and supplies where product qualities don't really matter. The larger that market is, the more efficient it becomes to deploy technology to produce and manage it.

Flip that observation over and you'll find a pleasant surprise waiting on the other side: By developing businesses that don't cater to the masses, small and micro-business can provide a comfortable lifestyle for their middle class owners and staff -- while remaining impervious to economic behemoths -- precisely because their enterprises are too small to benefit from the technology that drives mass enterprise. In fact, if small and micro-businesses build their brands according to my definition, no competitor large or small could touch them in terms of cost or quality. They'd enjoy profitable revenues with no threat because they'd be perceived as "the only solution," too small to justify the capital investments that displace humans.

Am I off base here? Well, take a look at http://www.saddlebackleather.com Here's a guy that sells saddlebags for use as briefcases and other uses. It's a fusion of real Texas know how and modern day reality. Everything is hand made, with high-quality components -- and none of it is all too cheap. You can have your hand-tooled saddlebag shipped to you for a whole lot more than that polyester Targus tote you drag out of WalMart, but if this is the statement and product quality you want, you simply won't find it anywhere else. This is it. You're not going to find any Chinese knockoffs, because the market for these bags simply isn't large enough to justify a pirate's investment. Bad news for off shore counterfeiters, but good news for Saddleback Leather and proof positive that what I'm advocating is the right solution to save the middle class.

If you think "creating jobs" is the answer, you're way off course. The last thing this country needs is more jobs destined to evaporate when stimulus programs and government funding dries up. What America needs are small and micro-businesses niched in a way that protects their livelihoods as part of the business plan. Staying just small and narrow enough to be perceived as the only solution to their prospects' problems -- which will solve the middle class's problems, as well.